Posted
by
timothyon Friday May 30, 2014 @11:32PM
from the cheaper-to-grow-them-in-iowa dept.

An anonymous reader writes "After only one year in operation, Google's Moto X factory in Fort Worth, TX, is scheduled to close at the end of 2014. The decision to close apparently has nothing to do with Google's decision to sell Motorola Mobility to Lenovo and everything to do with poor sales numbers and high labor and shipping costs in the U.S. The factory had, at one point, employed 3,800 people. Their ranks now number at about 700. Moto E and Moto G, newer and cheaper iterations of Moto X, have sold in more profitable numbers overseas, so Google's original rationale of building phones nearer to the largest customer base to decrease time between assembly and delivery to end user will unsurprisingly force the closure of the U.S.-based factory and transfer labor overseas as well."

How does making the handsets in China reduce the cost to ship them to American customers? Seriously. Are there some odd shenanigans or something here? otoh, I can't imagine how any company can compete with the kind of wages you can get in the Philippines and China. The time to market thing woulda been nice since they could beat Apple or Samsung to the punch, but then Motorola's engineers and marketing didn't really have the punch they needed:(.

Even the summary already explains that. They expected the Device to sell well in the US, so it made sense to have a factory there. Only it doesn't sell well, but it does sell well in Asia, so they can as well just manufacture it there.

And the reason for devices not selling well in the US is the bundling scam that the telecom operators runs. The telecom operators picks which models you can buy and which services that can be offered with it. So it may not be a fault with the device but with the business model.

And the reason for devices not selling well in the US is the bundling scam that the telecom operators runs.

In reference to other models, yes, this happens, but it's not the reason for the failure of the Moto X in the US. The Moto X is available on all 4 major carriers in the US, from the carriers themselves and from Motorola directly.

The reason is that no one pays the full price of a phone in the US. In most other countries you'd upfront (or per month in a payment plan) the phone, and pay $20-30 in network charges. Americans have an expectation of $100/m in phone bills, and a *free phone*.

You mean "free phone". I recently (December) bought a new phone at AT&T. My contract was month-to-month as I used a phone that I already had. The choice that I had was:

- pay $99 for my phone (HTC one mini) and sign a 2 year contract;

or

- pay the full $399 for the phone and get a $15 discount on my bill

Obviously I paid the $399. Not only did I get it unlocked with one phone call to customer service, but it is also cheaper in the long run...But even of the phone would be "free", I'd still prefer to

Well, at $15 a month savings for 24 months, you saved $360 on your bill but paid $300 extra for the phone, so you only saved $60. They're not really giving that bad of a deal. It's certainly less than had you bought the phone on a credit card and paid it off over 3 years.

Yes, and the Moto X is offered the same exact way as other flagship phones. It's not being singled out as more expensive, and it fits the same paradigm as other phones of around the same specs, which means "vendor lock-in" isn't an explanation for poor sales in the US.

I was looking at the newest plans, and from my layman perspective they are guilty of tying. Right now they are forcing you to buy a handset to get a discount on cell service, that , to me, is highly illegal tying. (Verizon Edge, specifically)

Even the summary already explains that. They expected the Device to sell well in the US, so it made sense to have a factory there. Only it doesn't sell well, but it does sell well in Asia, so they can as well just manufacture it there.

No, they expected the "MADE IN THE USA!" and "USA! USA! USA!" labels to sell it. It was also more a political move than a manufacturing one - namely Google wanted to prove their superiority to a certain fruity competitor that "you can manufacture in the US with not problems! S

TFA claims that the Motorola X has sold better outside the US, so presumably the trip to the dock for foreign buyers was starting to become more costly than any savings in getting them to American buyers, along with whatever delta there is between domestic and foreign assembly.

1: China has a monopoly on rare earths. You get a steep discount if you make your product on their soil than if you buy the rare earths to be sent to your factory elsewhere.

2: China has steep import barriers. Remember the voltmeters which were refused import because they were a certain color, and couldn't be taken back to China? There are no "fair trade" laws... The US does not export to China for the most part, and when it is an export, it usually ends up being made on the mainlan

Such laws (banning or regulating various "sin" related things like sex toys, porn, alcohol, etc) were common throughout the US for decades. Each state has changed or deleted these types of regulations and bans over time at their own pace (so in each instance SOME state is going to be last). The repeals have often been MANY years after they stopped enforcing them and most people forgot they were even on the books (lookup local laws related to transportation or pesky animals for some laughs). In this particul

1. No they don't. America's largest rare earth mine, the Mountain Pass Mine in California, is back in operation.2. Cellphones don't actually use significant amounts of rare earths, other than Tantalum, which comes from Africa and Australia, not China.

2: China has steep import barriers. Remember the voltmeters which were refused import because they were a certain color, and couldn't be taken back to China? There are no "fair trade" laws... The US does not export to China for the most part, and when it is an export, it usually ends up being made on the mainland after a while, either legally, or illegally.

That had nothing to do with import barriers. It was simply the cost of putting it on a ship that was more than the cost of the multimeters.

The only import barrier in that was was US refusing the import because it violated Fluke's trade dress.

I doubt the situation is the same for America and for volume distribution, but I can have an item shipped from China to Australia for less than I can post the same item within Australia - often when including the purchase price of the item. Yep, that's right, just the postal cost within Australia is more than the purchase price + postage cost from China to the same location in Australia.

I buy stuff from Hong Kong on ebay all the time - you can get items shipped from there for $0.00 - $0.99 shipping and handling - sure it takes 7-10 days to show up, but if they can ship that package 1/2 way around the world for $0.99, why does it cost $7.99 - $10.99 to get the same package shipped from 2-3 states away?

For RV-ing when I need LED bulbs to save the batteries, I end up ordering on eBay from Taiwan or the mainland for about a buck as well. Granted, it takes about 7-10 days to show up... but still. The light bulbs are a buck each with free shipping.

I wonder what I'm missing here because if I want to ship the same bulb to another state, it probably will cost far more than the bulb is worth.

I'm betting they have vertical control of everything except the last leg, they wait till they can fill a container up, put it on a freighter and ship it for a miniscule per-item cost, drop it off at a distribution centre owned by the same company, then hand it to the local postal service with whom they're already arranged a bulk discount.

They told you in the article... transport costs mostly were killing them.

Given that the transport from asia is if anything farther they're referring to the transport costs of parts etc that have to be imported or transported from other parts of the country. This specific type of thing is actually rather expensive in the US. Several other factory operators in the US have cited this as a problem. Especially small operators that can't handle the transport entirely with their own employees.

Neither article actually addressed the issue or justified the use of a swat team showing up at the factory and confiscating the material at gun point.

As to settling the case, the entire thing was a vast abuse of power and given that the executive lately hasn't been responsive to either judicial or legislative oversight, it isn't uncommon for people to just settle and run away from what is turning out to be one of the least accountable administrations in US history.

Oh bullshit. They enforced the law. A law, I might add, that was signed into effect by President George W. Bush. A law with 10 Republican co-sponsors. A law which passed with fine bipartisan support in 2008. A law which Tea Partiers must oppose but which Republicans love because it's protectionism for the US logging industry. A law which has been proven empiracally to be working, since illegal logging is down 22% worldwide since the US and other countries enacted it.

You are a moron if you think you need a SWAT team to raid an established factory like Gibson. They could have simply informed their lawyers and worked something out instead of pulling their dick out and escalating the situation. Your fantasy of the Gibson factory workers making an armed stand is just that, fantasy.

Your fantasy of the Gibson factory workers making an armed stand is just that, fantasy.

Who's the moron? Perhaps you've heard about a little incident in Nevada involving a rancher named Cliven Bundy? It isn't fantasy, asshole. It's already happened. This genius decided he would try to create Citizen's Eminent Domain and seize land from the government. So far it's working, because the BLM wasn't wise enough to do what the FBI did to Gibson.

Damn those regulations. Businesses just can't dump their toxic waste directly into the rivers, force workers to clean smartphone screens with known carcinogens and are forced to provide workers compensation and health insurance for their workers. Friggin government red tape!

I completely agree with you, but the problem is that not trashing the place or the employees makes domestic products more expensive. The only answer is to impose penalties on products imported from countries that don't enforce reasonable environmental and labor laws. I figure that will triple the cost of Chinese products, but what the heck. And by labor laws, I don't mean they have to pay workers at American rates. I understand that for factory workers in China $10/day may be good money, and that's part of

How does making the handsets in China reduce the cost to ship them to American customers?

It can, actually... If the cheapest way to get an item from coast to coast is a big container ship, then having the loading done by $1/day Chinese labor can be cheaper, if the fuel costs for the slight extra distance doesn't erase it.

Every American is entitled to own a house with three bathrooms and drive five cars.

Well, you can't have that, but if you're an American citizen you are entitled to:
a heated kidney-shaped pool,
a microwave oven (don't watch the food cook!),
a Dyna-Gym (I'll personally demonstrate it in the privacy of your own home),
a king-size Titanic unsinkable Molly Brown waterbed with polybendum,
a foolproof plan and an airtight alibi,
real simulated Indian jewelry,
a Gucci shoe tree,
a year's supply of antibiotics,
a personally autographed picture of Randy Mantooth
and Bob Dylan's new unlisted phone

It doesn't matter. Unions are a right-wing bogeyman that gets blamed regardless of any rational analysis of their effect, or even whether they exist. For table thumping rhetoric, a really good bogeyman needn't b real. All you have to do is get a few million people to reflexively parrot it. This avoids the trouble of actually thinking, which makes some people's heads hurt.

Yes, its a bogeyman, and totally false as a reason for our uncompetitiveness. The real reason is US income taxes. They make manufacturing here too expensive. Repeal the income taxes, and go back to work, and have your non-college-educated friends and relatives go back to work, in factories, building things that were formerally built in China, India, Korea, Japan, Canada, Mexico, Germany, Italy, etc.

The income tax really doesn't hurt the top guys. They have their tax havens overseas.

A VAT would be useful, because you can't hide a Maybach like you can some bonds in an offshore account. However, sales taxes are regressive in general, and again, the burden of it would be on the shoulders of people buying basic stuff to survive.

A tax system is a debate into itself. You need a number of factors in it:

1: Some progressive-ness. People just getting by need a bit of help, so it can't just be taxing food, h

A VAT would be useful, because you can't hide a Maybach like you can some bonds in an offshore account. However, sales taxes are regressive in general, and again, the burden of it would be on the shoulders of people buying basic stuff to survive.

remove Health Care from jobs and then labor costs will come down. Out side of the usa your job does not control your Health Care

Someone has to pay for the health care. Remove insurance from health care and then health care costs will come down. Outside of the USA, an insurance company does not need to profit for you to get health care.

Remove health insurance companies from the equation, go to a single payer system, and then things will get far better. The US spends twice as much on health care than the next country on the list, Norway... and we have jack and shit to show for it because the money goes into the insurance companies and flies overseas, forever out of the US economy.

It doesn't have to be single-payer. Germany has over 100 healthinsurancecompanies (German style spelling), but they're non-profit and heavily regulated. Works for Switzerland and a number of other countries too.

health insurance companies are bureaucratic nightmares even with Obamacare. It's worse now than it was a year ago but we also have to look at why it's that way and start simplifying things, also start barring the health care industry from charging laissez faire prices for everything, that's the root cause here outrageous prices that outstrip inflation and have no bearing in reality. If healthcare is critical to an economy it's time to start regulating it and break up these damn health care/hospital consor

Duh, EVERYTHING costs more in the USA. That's why lotsa people buy stuff overseas. Our high cost of living is legendary. So why are U surprised when healthcare is $2X.

Single payer would get gov't involved, which is ALWAYS guaranteed to cost more or deliver less or deliver it waaaaay slower. The US Gov't cannot do FAST, CHEAP, and GOOD all at once. They just can't. The US military is FAST and GOOD, but it sure as hell ain't cheap. The US Post Office is Cheap and Good, but not necessarily fast, at

I pay $194/month as a retiree for former-employer-subsidized healthcare. I would expect that to go to about $1500 / month from a private company on the open market. Do I want my retirement reduced to deciding to pay the electric bill or affording my medicine due to the O'care high-deductibles? Nope. Leave this the hell alone, so I can have a good retirement.

Want to really help the American people? Pass the Fair Tax, which would put everyone back to work and they could then buy their own healthcare w

In the early 1990s, I remember the mass layoffs in that recession being blamed on "the lazy US worker" compared to the stereotypical [1] Japanese worker who was touted as someone who would give his or her life for the firm he worked for.

[1]: Yes, stereotypical.

I remember hearing the same thing during the Carter administration. Its nothing new. What *is* new is that we now realize that maybe the Japanese didn't wreck the US economy all by themselves - instead our own 1%-ers did. The Japs were just a handy sc

Democrat president Franklin Delano Roosevelt tried to control the economy; During WWII he froze wages. Like any typical politician of either party, he failed to foresee the obvious and predictable response of the much-more-nimble business community. Businesses rapidly found another way to boost compensation in order to keep/attract the best employees; something the employees would happily take because it would be even more valuable than cash: "health insurance". Prior to this time, most Americans paid their health costs out-of-pocket and did not have health insurance. After the wage freeze, employees got their frozen pay PLUS health insurance (whose value was NOT TAXED) that would pay their medical bills (allowing them to NOT spend their limited and taxed cash on healthcare). Once this trend started, it proved impossible to break; now we all expect our employers to "give" us health insurance and we all expect not to be taxed for it.

This replacement-for-money (health insurance) we can "spend" getting healthcare does not "feel" like money to us and cannot be "spent" elsewhere so it becomes a driver of healthcare cost inflation. First, we do not feel financial pain when we use it (sort of like using credit cards versus cash). Second, we are insulated from rising medical prices (we are promised a benefit, not a price tag) so it has become a convenient way for the government to further tax us - by underpaying for medicare and medicaid services, which causes hospitals and doctors to shift the costs to the bills of people with private health insurance.

Obamacare will likely destroy this linkage. There's SOME poetic symmetry to one liberal Democrat undoing the economic distortion caused by a previous liberal Democrat... but that'll likely be of little consolation to the people who will no longer have an employer on their side in matters related to health insurance. Most Americans have depended upon corporate HR people spending lots of time comparing the costs and benefits of various vendors and policies, negotiating the best deals possible, and intervening when there are problems. After Obamacare fully kicks-in (probably in 2017 - it's tough to be sure given the dozens of arbitrary waivers and extensions in place) people will likely pick whatever policy looks "best" to on a government website and then when things go wrong nobody will be there to help them. Most people will probably pick policies about as well as they pick their food and thier 401K investments - which means they'll do a much worse job than their employer's HR people used to do. I actually support the idea of sparating insurance from employment, but I think it ought to have been done VERY differently and much more explicitly (perhaps by initially changing the laws so that individuals and small businesses were treated the same as big employers on health insurance (which has NOT been the case historically)

Democrat president Franklin Delano Roosevelt tried to control the economy; During WWII he froze wages.

What's more important, defeating Nazi Germany and the Japanese Empire, or worshiping the Market God? I think we won that war, in large part because the Arsenal of Democracy produced war materiel at a rate made the few rational people amongst the enemy scared shitless. Wage and price controls, and rationing, meant that we didn't have the sort of inflation that trashed the American economy after other wars. The War Production Board (a/k/a the control in a controlled economy) was disbanded after the war.

As for the short-sightedness of FDR (I wonder if anything other than market distortions was on his mind between say 1941 and 1945?), which helped lead to widespread employer paid health insurance, another liberal Democrat by the name of Truman tried to fix that after the war. He pushed for universal health care, but was defeated by the Republicans.

FDR imposed wage and price controls because the US wartime economy was already going at full tilt. Everybody was working maximum hours at maximum effort to produce all of the goods and services required by our military in a time of total global warfare. There was essentially zero unemployment and no spare capacity in the economy. Under these conditions it was necessary to impose wage and price controls because without spare capacity the economy was very sensitive to inflation pressures that would have occur

There are dozens phones, each with one minuscule feature that sets it apart from the rest. The market is saturated. Verizon's website shows 31 different smartphones and most of those will roll off and be replaced within a year. And, judging by the pricing, they apparently can't even give the Motorolas away.

I'm very picky about my phones: had an HTC from 3.5 years ago, but when the 2 years came up I couldn't find a suitable replacement until I finally went with the MotoX. First off, let me make it clear--this is a fantastic phone, one of (if not the) best, and for many reasons. One of the reasons I went with it was the made-in-America bit, but honestly, I don't see another alternative--made in America or elsewhere--that's this good. That having been said, the next-closest contender was a Samsung, and I would s

Everywhere I look it's Samsung, Samsung. My personal experience after having two Samsung phones and two Motorola phones is that Samsung has prettier LCDs and better cameras but their quality sucks. They are constantly locking up or working very slowly. But... everywhere I look the advertising is all about Samsung. Has Google even tried to market it's Motorola stuff? The last time I saw anyone pushing Motorola was back when the kiosk guys at the mall kept stopping people to look at the Lap Dock. I have one now, btw.. I love it! But... I was never going to buy one at their price! I bought it used and cheap after they discontinued them.

NO, they weren't trying. They bought Motorola [google.com] for the patents it had, the cellphone business was a secondary thing.

Google and Motorola Mobility together will accelerate innovation and choice in mobile computing. Consumers will get better phones at lower prices.

Motorola Mobility’s patent portfolio will help protect the Android ecosystem. Android, which is open-source software, is vital to competition in the mobile device space, ensuring hardware manufacturers, mobile phone carriers, applications developers and consumers all have choice.

There was no Consumer benefit here because the Moto-X was priced competitively with Samsung, HTC and Apple. If they'd been priced more competitively then you'd see more uptake. The Moto-X is a great phone, Google botched it.

My wife just replaced her Samsung Galaxy with a google Nexus. Worlds of difference between her old galaxy S3 and the Nexus 5 in terms of performance. Plus there is a lack of "little" things that annoyed her on the Galaxy.

My wife just replaced her Samsung Galaxy with a google Nexus. Worlds of difference between her old galaxy S3 and the Nexus 5 in terms of performance. Plus there is a lack of "little" things that annoyed her on the Galaxy.

key word: oldof course if you compare a 3 year old phone with the latest money can buy, you are going to be impressed. compare the nexus 5 with the galaxy s5 and you will see:- samsung has vastly better battery- much faster- better screen- real buttons that dont eat up your pixels to display black- much better camera/video- much more storage- small but useful features like ir blaster, heart rate sensor, temperature sensor, barometer, hygrometer, etc- many useful software features (face tracking, gestures, m

Sorry, I just meant display. See, that's how much I care about how pretty the picture is. Yes, I am aware not all flat screens are LCDs but I don't care what kind of screen was in my SIII or my Stratosphere. My TV might still be a CRT if it weren't for my wife although I would have a Bluray player and some sort of media player (for Netflix, Hulu, etc..) hooked up to it. I do care about the content I have access to, just not so much the quality of the picture.

The Moto G and Moto E is really amazing for what it is - budget phones that have all the right things - IPS screen, snappy processor, good software, respectable brand, LTE (on E and Gv2), etc. It sells extremely well in the UK and many other markets in the EU.

If they opened up a factory in the UK or somewhere else in the EU, it may be 10-15 pounds more expensive to make than in China, but still there would be plenty of takers. In fact probably more s

The Moto G and Moto E is really amazing for what it is - budget phones that have all the right things - IPS screen, snappy processor, good software, respectable brand, LTE (on E and Gv2), etc. It sells extremely well in the UK and many other markets in the EU.

If they opened up a factory in the UK or somewhere else in the EU, it may be 10-15 pounds more expensive to make than in China, but still there would be plenty of takers. In fact probably more so as it is manufactured locally and in an advanced economy - a sign of quality in its own right. The Raspberry Pi is made in the UK, and they were able to pretty much match cost with the batches produced in China.

Isn't this a quirk of the nature of the Raspberry Pi product? Rasperry Pi is just a board. We assemble electronics in China because Chinese assembly is cheap. A robotic boardmaking machine costs the same everywhere. If you don't need to assemble the pieces together with a screen, battery, processor, buttons, speaker, etc, there is no advantage to making the board in China.

Moto X was a relatively expensive phone, with low specs. If you had $600 dollars to spend on a phone (either yourself or through contract subsidies), there would be very little reason to pick Moto X. The main attraction of the Moto X is that there are many variants in terms of colors and materials, and that's what you pay a premium for. Problem is, in this price range you already have lots of choices for very nicely designed phones, many with better specs. What's left is a niche market that is willing to pay a premium for stuff like a wooden phone back on a otherwise mediocre phone. That's still some market. However, I don't see how you can expect that to sell as well as a cheap phone with good specs like Moto G.

Also, the article suggests in tone that Moto X and phones like Moto X sell better in asia, but the fact is Moto X hasn't sold well anywhere. It's just completely different phones like Moto G that are doing well.

If all you do is read the Spec sheet, yeah, it was underpowered. The benchmarks bore it out as a legit flagship phone, though.

Remember, on paper, the iPhone 5s is 'only' dual core with 1GB of RAM, but if you look up the benchmarks on Anandtech, it clearly outperforms all comers. This is the magic of well designed and intentionally designed silicon. The Moto X was a little less off-the-shelf than its competitors in terms of components, and that showed in the actual performance.

The timing probably meant a two-way squeeze: As Google's wholly owned phone vassal, they presumably had an incentive to design with an eye toward Google's objectives(which, based on the devices chosen for 'Nexus' status, and Android's evolution in handling SD cards, apparently point toward a bright and glorious future where your phone ships with enough flash for the initramfs, which then downloads everything else From The Cloud...); but as Google's newly wholly owned phone vassal, it would have seriously so

How can you tell if something is actually made in America. That label on the box just says where it's assembled. The exception is cars, which must be labelled by total value added in the US, not just assembly. I have a car that's 85% value added in the USA. It's a good old-fashioned American brand called "Toyota". 85% is much higher than most so-called American cars.